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Alex Leslie, ATRI | TL Carrier Costs: 2026 Update · Freightvine

• Chris Caplice: Hello and welcome to the Freightvine Podcast, your source for all things freight transportation. I'm Chris Caplice Chief Scientist here at DAT Freight Analytics, and today I'm joined once again by Dr. Alex Leslie, who's the Senior Research Associate at the American Transportation Research Institute, or ATRI. And ATRI, for those who don't know, is a not-for-profit research arm for the trucking industry. Now I invited Alex to the Freight Vine to discuss the latest 2026 edition of ATRI's operational cost of trucking report. This annual report is great. It provides critical, data-driven look at the financial realities facing carriers today, and it's available free for the public since they're a not-for-profit organization. So, after a brief period of improvement, trucking costs, as we've all seen, are officially accelerating again. Inflation is kicking back into gear. We've reached a historic milestone this year for the first time in history of this study, anyway. The combined cost of driver wages and benefits has exceeded one dollar a mile. And now, while direct pay increases have been relatively modest, driver benefits have jumped by six point six percent. And this is what fleets are doing now to compete, to offer stability to these younger drivers, and it's what they're demanding. In this episode, we explore why this is a unique supply side recovery as opposed to the demand side recoveries we've seen in more recent years. we're not seeing a massive surge in demand. Instead, the market is turning because capacity has exited over the last 24 plus months. In fact, idle capacity has hit a seven year high with what Atria approximates ten percent of all trucks are sitting off the road. They're idled. Now we also dive into the rising tide of nuclear verdicts and their transformative impact on insurance layers and especially smaller fleets, the surprising resilience of profit margins in this industry, and the brand new data on what fleets are actually spending on in cab technology. So whether you're a mega fleet, or you're an owner operator trying to cross that chasm to growth, the insights in this report are your roadmap for the year ahead. And following my conversation with Alex, I'll provide a truckload market update. So let's get started. Hi Alex, welcome back to the Freightvine Podcast. Alex Leslie: Chris, thanks for having me. Chris Caplice: Yeah, this is your third time 'cause I like to do this once a year when the new report comes out. ATRE has its report for the trucking costs and it's been updated this summer. And so I want to talk mainly about that, but to first start, let's refresh everyone. What is ATRI? What's its mission? All those kind of things. Just a level set. Alex Leslie: Yeah, ATRE is the American Transportation Research Institute and we're the not for profit research arm of the trucking industry. So we kind of straddle between, you know, we have a lot of engagement with the industry, with fleets, with drivers, but we also do dip our toes a bit into the academic side and and so we we kind of are able to get the best of both worlds and we're like I said, not for profit. So all of our research is well first it's set by a group of industry representatives that decide what our priorities are going to be each year. Chris Caplice: Right, right. Alex Leslie: And then it's all publicly available once it is actually published. So free to be used or abused, I suppose, as as we sometimes say. Chris Caplice: Yeah, I love that it's it's publicly available. That's the thing that that's great. And it's a great place to start. And you have both full truckload, LTL, you have a wide variety of of carriers that you survey as part of this study. Alex Leslie: Yep, yep, absolutely. Chris Caplice: All right. So for the twenty twenty six report, what are the big top three takeaways? Alex Leslie: You know, I I think one of the ones that stood out to me was the fact that costs are now accelerating. So, you know, costs most years they go up, of course, costs rarely go down. But, you know, relative to, you know, the past few years, we came out of COVID, inflation was super high, and each year costs were going up by at least a slightly lower amount, right? The increases were improving. They were decelerating. Chris Caplice: Right, right. Alex Leslie: But then this year they went up at a rate that was higher than last year. So they started accelerating again. And and that really you know, it shows the role of inflation essentially kicking back in. And certainly that's not the direction we want it going in. Chris Caplice: Yeah, w now were there certain areas, I mean not not everything went up at the same line. What were the key drivers of that inflation? Alex Leslie: A couple of the biggest ones were driver benefits, repair and maintenance costs, which was sort of a complicated one because really it was that folks were spending less on truck and trailer purchases, so it was sort of a migration into repair and maintenance. but then insurance also was was one of the high risers too. Chris Caplice: I think and so are you seeing the the reflection of some of these nuclear verdicts on on the for the carriers? Is that is how is that manifesting itself? Alex Leslie: Yeah, it nuclear verdicts manifest in a couple different ways. I mean, one, of course, if you get one, you know, you Chris Caplice: Right. Alex Leslie: you've drawn a really rough hand there. that's a very direct cost. Another way that they hit, of course, is just, you know, the fact that it is a really litigious environment. So there's a lot more lawsuits going on. That means you have to pay your lawyers a lot more to be, you know, getting involved in these cases, even if they don't go to court. You know, so of course then you have the fact that all the payouts are kind of increasing, you know, even for settlements. Finally though, it obviously comes in on the cost of your insurance itself. And part of that is is, you know, right away at the primary levels of coverage. But we did some recent research just on insurance costs and how fleets manage that. And one of the things that we've seen is a shift towards, you know, these higher layers of excess coverage. The ones that normally are are cheaper per mile at least. you know, like the coverage layers from like say fifteen to twenty million. those dollar amounts, which historically have been more stable, are beginning to increase as well because of you know, the more these verdicts increase, the more fleets are actually tapping into those higher layers of coverage. And and so the prices Chris Caplice: Wow. N Alex Leslie: are really transforming. Yeah. Chris Caplice: now has the recent Montgomery decision with the Supreme Court where it removes the coverage for brokers impacted that? I mean you you look at asset based providers. You don't brokers are not included in this study, is that correct? Yeah. Alex Leslie: That's correct. So we we don't include brokers and and we haven't yet, at least, in the research that we've done on insurance. It's too it's it's really too early to see the sort of full impact of that. A lot of these you know, when you see a case in the trucking industry, it'll often take, you know, three years to come to fruition. So it'll be a couple of years still before we really see the true costs come to bear for. Chris Caplice: Well CHR just had a major ruling against it, didn't it, earlier this summer. So yeah. Alex Leslie: Yes. And no, absolutely. So right, yes, we will see the first wave will Chris Caplice: Yeah. Alex Leslie: start having their impact. But the costs that we see are just the tip of the iceberg. We won't really see the Chris Caplice: I I agree. Alex Leslie: total industry-wide cost until, again, everyone is now starting to bring those cases to court. It'll it'll take us probably three years before we really hit the full level, maybe even a little longer, honestly, for everyone to kind of get by everyone, I mean the plaintiffs to all kind of get themselves lined up. Chris Caplice: Now, same with the with the litigation side, we'll come back to the benefits because that's another really interesting topic. I imagine this is affecting carriers differently based on the size. Is that the primary differentiator between the the the owner operators versus the large mega fleets? Alex Leslie: Yeah, and and it really comes down to how your coverage is structured. So the smaller fleets tend to have a traditional deductible policy. This is like what we all have for I shouldn't say we all, but most of us have for our our own insurance, right? You if something happens, you pay up to the deductible and then the insurance kicks in. And so for those fleets, you know, they're paying more per mile for the insurance coverage itself. but then they spend a bit less out of pocket. Now, as you get to the larger fleet sizes, that model is basically not financially possible because of the the volatility of the market for insurance in commercial auto. And so they retain more of their own risk, which means they end up spending more out of pocket and then a bit lower premium costs. Now, once you get to the largest fleets, they're really managing a lot. of this in-house. They're, you know, Chris Caplice: Self insuring? Alex Leslie: they're self-insuring to a high degree, which means they're able to really cover most of their litigation as well. If you're self-insuring, for example, just the first million or two million, well, if you're getting taken to court, you got to work with the insurer anyhow, because they're covering, you know, million three and higher or whatever. But the biggest fleets where you know they're self-insured up to 10 million or or more. they're doing a lot of their own litigation management and so forth in-house as well. So they're ending up the ones who are really footing most of the bill overall for their own expenses. And and so for them you see huge expenses as well in the area of legal fees, in the area of paying all those awards themselves. Chris Caplice: So is this just a cost of doing business or is this an existential threat to the smaller carers? Will this reduce increase the reduction of capacity? What do you think? Alex Leslie: You know, it's it's the market is shifting. And it's not clear yet whether this will have a kind of existential threat, but absolutely we are seeing coverage become more expensive. and as these litigation, either settlements or awards get larger, it is coming up against. The kind of traditional, if you're a small fleet owner operator, you probably have one million in coverage. Historically, most plaintiffs they'll just they'll figure out what you've got and then they'll say, okay, that's what we demand. But as these numbers are going up across the board and as plaintiffs are getting bolder, they are becoming more comfortable with asking for more than your coverage limits. And so That along with the fact that I think we've had this conversation before, Chris, where you know the barrier to entry at the lowest level is still so accessible, but it's that kind of middle transition level where you're trying to grow from say maybe 10 trucks to like Chris Caplice: Yeah, yeah. Alex Leslie: 50 trucks, like Chris Caplice: Yeah, crossing that that chasm where you 'cause it's such a network effect for how you have to grow your network, especially in truckload. I mean there are no s are there any small LTL carriers for there? You you have to have scale, pretty much. Yeah. Alex Leslie: Right, right. Chris Caplice: So for truckload, yeah, it's harder to reach that that critical mass. but it seems like it's Alex Leslie: Yeah, and and that is really what we do see on the insurance side as well, right? So now if you're a fleet that's trying to get to like fifty trucks, you have to start thinking, well, is five million enough? Do I really need 10 million now? And that's Chris Caplice: And Alex Leslie: where suddenly the fact that nuclear verdicts have driven up those higher coverage levels, that's where it becomes yet another one of those prohibitive cost barriers to making that jump across the chasm. Chris Caplice: So so that that's really interesting. So you don't think it's gonna stop the owner operators. They're still gets it's the barrier to entry is so low. But for that middle range for growing up, this is just another cost that's added on top of driver retention, all those different things. And so it's maybe not individually, but all these things are contributing to making so that they're it's introducing the re economies of scale to trucking because you get bigger you can kind of pool some of your risks and those things. Yeah, that's really interesting. I don't think it'll consolidate. I think we'll still always have that bimodal distribution. but Alex Leslie: Yeah. Chris Caplice: let's talk benefits now, 'cause that's the other thing that was really interesting where that's really done. And do you think this is how some small carriers are competing? Is it a benef benefit wars between the carriers? Alex Leslie: You know, so historically, for a long time, your small fleets didn't offer much by way of benefits, d overall, generally speaking. And you know, they were able to do that because they would stay competitive enough on driver pay and then offer the kind of intangible benefits of driving with a small fleet. You know, you've got some flexibility there, you know who runs it, you, you know, you've got more of that family feel, for example. We have a shift now, though, where, and Atri has seen this in some of our research on younger drivers and what they want. They want benefits. They want a reliable benefits package like what they could get in other industries. And so the smaller fleets that historically had very low benefits costs, we have seen them. in the past, you know, five years certainly, play catch up and really begin to offer more benefits to be competitive on that front with the larger fleets as well. So for those smallest fleets, you know, like twenty five trucks and fewer especially, they've made this big jump in what they offer, but then of course as a result, their benefits costs. Chris Caplice: So this is more the intangible health benefits, things like that. And I think your report said it went up by six point six percent year over year, which is quite a big jump, but it's not direct pay. Alex Leslie: Correct. Chris Caplice: It's more of the benefits. But I also your report said what this is the first time combined driver wage and benefits on average exceeded a dollar a mile. That's that's that's pretty substantial. Alex Leslie: Yeah, it is. And you know, it's been an interesting compensation market because on the driver pay front, the traditional, like just your per mile classic pay, you know, the we've had two years in a row now where increases have actually been sub-inflationary. for for driver pay. For driver pay. Chris Caplice: For the for what benefits increase or pay? Driver pay? Alex Leslie: Yep. And and what that really points to is again, it has been a soft labor market in trucking, certainly. But actually just in the US as a whole, driver pay this year went up by, I believe it was 2.5%, and nationwide average pay only went up by 2.7%. So essentially drivers are right in line with all of the rest of us. It's just been a soft Chris Caplice: No Alex Leslie: market. Chris Caplice: but but if driver pay went way up during the pandemic. Alex Leslie: You did. Chris Caplice: So that was now that was shockingly five years ago. Alex Leslie: Yes. I know, right? Chris Caplice: It's crazy. I still want to put a mask on. but Alex Leslie: Yeah, it it is so and that's a you've made a good point, Chris, which is we have to think that even a subinflationary increase today means that we we've locked in those increases Chris Caplice: Big basin. Alex Leslie: that were big in 2020, in 2021, in 2022. Now, the flip side of that is that you know, traditionally in the trucking industry, driver pay is one of those things that fluctuates with. the market. So when we have a tight market, when rates are up, driver pay goes up. And when the market is poor, then you know, driver pay it may still go up by but by a much lower amount. So in other words, right. Chris Caplice: But it it doesn't go down, does it? Yeah, it it builds it's less doesn't build as fast. Yeah, that makes sense. Alex Leslie: Exactly. It it it very rarely, if if ever, Chris Caplice: Right. Alex Leslie: goes down. But it is, it does follow a supply and demand that is in Chris Caplice: Absolutely. Alex Leslie: lock with the freight market in general. Now, the problem with driver benefits, and and what makes it challenging, especially for those small fleets who are offering more benefits now than what they did five years ago, is that benefits do not respect the freight market. Right, they they play by a different market, right? That's healthcare inflation, hospital costs. and so you know, historically the trucking industry, you know, driver pay can be it it often fluctuates with the market in a way that that helps trucking companies Chris Caplice: Th well it's controllable to some degree. They can ratchet it up, ratchet it down. Health benefits, it's tough if you're gonna cut a benefit. I mean that's that's a big step. Alex Leslie: It's very unpopular to do that and and especially because often right people need their benefits most during during these these downturns. But but what we've seen, you know, in twenty twenty-five, medical care inflation was three point two percent, which is above inflation in general, so we see it trending higher. And then hospital care specifically was up six point seven percent, which is The highest, I mean that was the record high for I something like almost twenty years, the highest year over year increase. So that that is again, that is a s cost that we don't have in the industry the ability to, you know, soften that blow. And and that is a challenge, especially for the small fleets, but but really for everyone across the Chris Caplice: So we're still on the first big takeaway, by the way, that you had you said I asked for three. We're still on the first one, but when then we continue on it. What about fuel? It's kind of gone up but it's kinda coming back down a little bit. W what do you what what's the situation you think there? 'Cause that's so tied into the geopolitical situation. Alex Leslie: It it's so hard to this is one of those things where we had to edit the report up to the day it came out practically because of the changing environment in the Middle East. You know, for some context, when we attacked Iran, the fuel markets essentially did the same jump that they did when Russia invaded Ukraine. If you look at the the the chart, the spike is almost the same exact kind of situation. Now Big difference is that so much more oil moves through the Middle East on a global scale that a lot of the you know the US energy information groups they essentially have the expectation that it will take longer for costs to normalize as a result of this disturbance than, for example, when Russia invaded Ukraine. So they're now looking at something like mid 2027 being the sort of the soonest. you know, the the hardest thing for trucking fleets, of course, is the sudden spikes, right? That's where your, Chris Caplice: Yeah, yeah. Alex Leslie: you know, your fuel surcharge contract has a lag and you're stuck, you know, kind of holding the bag there. Or if you're, you know, in the spot market, you're, you know, you're making those all in agreements. And so it just hasn't had time to filter through. So a long tail isn't the worst thing in the world as long as it's steady. But right now, when it is uncertainty, that's that's the thing that we just we're kind of just stuck on the ride for. Chris Caplice: Yeah, and well the the the good news, if it is good news, is that the US has been less affected than most other countries. Like in the south east the Pacific and and the the Pacific Rim, they've been infected much more because they got much more of their oil through the Strait of Hemoose. And so Alex Leslie: It it yes, it is true that there that that we have more insulation than other countries, and and part of that is you know also related to the fact that the dollar is the global currency and you know there are other factors there too. but you know, I always remind people that oil is a global fungible commodity, right? So Chris Caplice: Yeah, yeah. Alex Leslie: even if you know we drilled 100% of the amount that we used, Our prices are still always going to be impacted by the global prices. So Chris Caplice: Sure. Right, right. But we haven't had to we haven't had shortages or or rationing or any of that, which is one thing. Okay. So that's the first takeaway. Or did we kind of wrap in a bunch of ones in there? What's the what's the second big takeaway from the twenty twenty six report? Alex Leslie: For me, a second big takeaway was it's been a multi-year recession and we are really seeing we're seeing that impact on operations in pretty significant ways. on, you know, key performance indicators, on how fleets are running, and also on the cuts that they've had to make to their workforce, to their fleet size. it it's really added up over this, you know. knock on wood that we have turned a corner, but it does. Chris Caplice: who you talk to. It depends. You talk to shippers. They're they were very happy with the last three years. Carers and brokers, not so much. So you Alex Leslie: Yeah, they were. Yeah. Chris Caplice: gotta gotta read the room, know what audience you're talking to. Alex Leslie: Yeah, yeah. And I can run some of the you know, some of the numbers we track, for example, mileage between breakdowns, that's a measure of repair and maintenance effectiveness. Also how new your trucks are, right? We saw that, you know, has decreased, which is worsening. Chris Caplice: So whi which which has decreased? Mileage between breakdowns? Okay. And that Alex Leslie: Yes, yep. Chris Caplice: means has the age of fleet has the fleet on general gotten older? And is that is that Alex Leslie: Yep, that is also true. Chris Caplice: a uniform across carriers or is it more of the smaller carriers have older equipment? Alex Leslie: What we saw is that the very largest fleets, Chris Caplice: Mm-hmm. Alex Leslie: more than a thousand trucks, they were sticking to their guns basically on trade cycles and buying new. And as a result, they paid for it. Their if you just look at their truck costs, it's up sixteen percent year over year. Which is which is Yes. Yep. Which is huge. Chris Caplice: For for procurement of new new trucks? wow. Is that because of the changing requirements? Some of the changing the what is it, those n sustainability or the different fuel emission standards that have come in? Alex Leslie: Some of it is pre-buys ahead of when those new Knox rules come in. Chris Caplice: New docs, okay. Alex Leslie: that is a factor for the large fleets. some of it is about tariffs, right? We've obviously the AIPA tariffs got struck down, but we still have section two thirty-two tariffs. That covers things like imported parts, imported trucks. Also, by the way, even if you make everything in America. You're probably importing metals. You're certainly importing rubbers. so tires also impacted by this pretty significantly. all that has been factoring into new truck prices. I mean, of course, new truck prices have been going up for years now as well, simply because the technology is getting better, right? It's we are getting better trucks out of the bargain. Chris Caplice: Yeah. Yeah, yeah. Alex Leslie: And I think that that should be acknowledged as well. But the largest fleets, then, right, they're you know, they had this huge sixteen percent increase on truck costs. Basically everyone else has been either lengthening that trade cycle, running their trucks older, spending more on repair and maintenance as a result, which is why we saw that line item increase by eight and a half percent. or you know, yeah, putting off where they can essentially. Chris Caplice: Yeah, I know right after the pandemic we saw that there was a lot of shedding of assets for the fleets. They all get a little little smaller. They wouldn't grow as much as they would before. and now it seems like this recovery and and your report mentioned this as well, as opposed to the previous handful of cycles that we've seen which were more demand driven, this is more supply. side and that there isn't enough capacity. And that kind of goes to what you were talking about with the insurance and that's why I asked about the existential threat. what what do you think about that what makes this cycle different then? Alex Leslie: A supply side recovery really is. It functions totally differently than a demand side recovery. Obviously you kind of get that in the name, but there are repercussions, I think, as well that are important to be aware of. So it's not again, a demand recovery is a classic, you know, there's all of a sudden an uptick in either new houses or you know, retail spending jumps up or or you know, take your pick. Manufacturing Chris Caplice: Right, right. Alex Leslie: maybe. Right now though, we're not really seeing, you know. Any increases are pretty modest in those areas. Housing has been, you know, way down. So demand is not helping us really at all right now. What is happening is that capacity has been leaving the market. this started in 2024, I'll say. So one of the reasons, you know, you'll remember the conversations we had, you know, a couple years ago is why is The market not improving? Why are rates not turning given that we've been in this recession for how long? Chris Caplice: Overcapacitated. Alex Leslie: Overcapacity, and in fact, back in 2023, even, we were a year into it already, fleets were still actually adding to their fleet size at that point still. We were still in the mindset that this would be a short recession. That obviously wasn't the case. In 2025 now, back to the present. What we saw was that fleets cut their fleet size by about two point four percent on average. And then on top of that, we saw that they were also leaving more trucks parked. So the trucks that they did still have, they were leaving about ten percent of those trucks off the road. So when you kind of combine that, yeah. Chris Caplice: Yeah, tell tell me more about that. 'Cause that's a statistic that I was a little surprised by and how you were able to determine that. So how how'd you figure out that they had about a ten percent capacity idled? Alex Leslie: Yeah. We look at the number of trucks in the fleet and then the number of company drivers basically. So we you know, we collect information on what the driver pool looks like, solo drivers versus team drivers. So we we're able to factor that in as well. and usually, you know, that number fluctuates. Often it's a little, you know, you rarely have one to one, you know, one truck for every driver or for every team, depending on what the operation is. You know, often it'll be a little under or a little over, depending on market conditions, depending on, you know, driver availability, that kind of Chris Caplice: Wha what what's the range that you've seen? I I don't even know it does it go as high as like one point two. And but you I I guess Alex Leslie: Yeah. Yep. Yep. So you might have Chris Caplice: your report said this year that it's a seven year low of point nine. So is it generally Alex Leslie: Yes, exactly. So we'll Chris Caplice: on average above one or is it go all over? Alex Leslie: I would say it's it it does go all over. It does depend on again a lot of different market factors. we can see it Chris Caplice: Yeah. And I imagine there's a lot of variability within different carriers. Alex Leslie: Yes, right. It is totally natural to have, you know, one point, you know, 1.02, 1.03, you know, or 0.97, right? Essentially, and again, the way to think about that would be, you know, a.97 is the same as saying about three percent of trucks did not have a driver in them. It that could be because, for example, you're having a hard time getting enough drivers hired, right? Maybe there's a lot of demand for drivers. Chris Caplice: Right. Alex Leslie: maybe on the other side, maybe you have, you know, a 1.03 would mean that you've got you've got more drivers actually than what you have trucks. And that might be because, for example, you can't get a hold of enough trucks, for example, due to shortages coming out of the pandemic. Now, 0.9 is is outside of the normal range that we would see. It's well outside. And and again, that tells us that. About ten percent of trucks are not occupied. Chris Caplice: So but that suggests that they're ready to be i if if you can get more drivers hired, that the constraint is is drivers, but if you're able to bring that in, the capacity could come in. 'Ca tha that's one of the things about the truckload market for sure, it can expand and contract pretty quickly. Alex Leslie: Absolutely right. If you've got the truck on hand, it's a truck you bought two years ago, you ran it for two years maybe, but now the freight just isn't there. So rather than you know, you're not gonna have it just run you know, just turning it on for fun, right? So, you know, a driver retires, you just wait to replace them. and so as soon as it does change, yeah. Chris Caplice: So your numbers, I just want to make sure the the point nine driver to truck ratio, that's through calendar year twenty twenty five? Or did that Alex Leslie: Correct. Chris Caplice: okay. And so what do you think happened in H one of twenty twenty-six? Do you think capacity has entered back in the market? Do you any sense of that? I don't know if you've been doing measurement or surveying on that, but what are your thoughts? Alex Leslie: You know, it it it seems based on some of the federal data points for industry hiring that some capacity probably has come back in to the market. We've seen, you know, we've seen orders for new class eight trucks tick up as well. Now orders are not the same as actual purchases, so you know, there's gotta wait to see that. But it does seem that at least some capacity has come back in between hiring numbers going up a little bit, not a lot, but a bit, and then between FMCSA registration numbers have gone up a bit as well. And this I think is I'm glad you asked that, Chris, because it really gets at one of the most important dynamics of a supply-side recovery, which is that it's like building a fire. If you Put too much fuel on it, too much wood on it right away, you can put the fire out. you can suffocate it. And and that is, you know, the risk of if all of a sudden fleets amp up their capacity again, if all of a sudden a wave of new owner operators comes into the market, all of a sudden you get oversupply again. And that drives the rates right back down. And then we kind of have to start over from square one. So I'm not saying that that has happened. I I haven't seen any indicators that it has, but that is the risk that a supply side recovery is kind of always living under. Unlike a demand side recovery, right? So that that's an important dynamical difference. Chris Caplice: Yeah. But it seems like cares are a little gun shy after the last three years. They're not adding it rapidly. It seems like it's it's more gradual. Have you noticed any like differential? Is it mainly the large fleets are getting larger and or is it more entry coming in at the low end? Have you noticed where you see that coming in? Alex Leslie: We don't have a good read on that, unfortunately. You know, we've we've heard certain things here and there, certainly, but but not enough to be able to be able to get a broad picture just yet. A lot of the federal Chris Caplice: Yeah. Alex Leslie: data is just kind of overall. and so I cer I certainly hope that there is a bit of, you know, hesitation and discipline on the part of fleets. Chris Caplice: I I think I tr I've talked to a handful of of of carriers and I I mainly talk to the larger ones and they're they're not stupid. They they know that Alex Leslie: Right, right. Chris Caplice: you want to go you don't want to overbuild and do that. But let's get back to the demand side for a second, because there's one sector that really is going gangbusters, and that's the data center construction. despite their protests, so it's still going on. And as I've talked to different carriers, I was at a shipper conference not too long ago. I was shocked at the number of different carriers that are affected by this. It's not just flatbed, it's not just rail. you have all sorts of material comes through this and you have supporting. It seems like if the data center bubble pops, it is a bubble, it will pop, that could really crater a lot of truckload demand. Alex Leslie: Yeah, it it absolutely could because it's it is a situation of nice money if you can get it. Right. It is not everywhere, right? Different states are more friendly Chris Caplice: Yeah, yeah. Alex Leslie: or less. it is certain types of products. Like you say, it's not just flatbed. Right. Yeah. Chris Caplice: It's not just steel and concrete. I mean that's the thing. There's servers and so I was talking to someone who na norm they normally ship like agriculture products and they were shifting to this 'cause it's just it's available and it they pay it's project based so they pay pretty good fees. Alex Leslie: Right. But it doesn't, like you say, it it's not gonna last forever. And even you know, it doesn't even as it continues, it's not a guarantee that it's continuing in the area where, you know, you offer service. Chris Caplice: That's true. It's constantly moving, although Virginia Virginia and Texas love their data centers, you know? Alex Leslie: Yes, those places are probably reliable for this. But yeah, I mean it's it's it's right, when that goes what steps up next? Does that tide us over for housing to improve a bit? Does it tide us Chris Caplice: Maybe, maybe there's such push for more housing. Both both parties, you know, affordability of housing with different solutions, but they're pushing that. But I just read something recently about as I think it was Cummins and maybe was it John Deere, but generator sales, generator construction. I mean, because the data centers can't all tie into the grid, and Alex Leslie: Yeah. Chris Caplice: so they're generating their own. power. And so this is driving it's a knockdown for generator construction, which drives a whole different supply chain of parts. So there is some demand Alex Leslie: Right. And batteries. Chris Caplice: propping up. It's the so whole total demand isn't going up. but maybe it's masking a drop in demand for other things and it's kind of looking like it's stable. And I I was I'm I'm Alex Leslie: Yes. Chris Caplice: still trying to figure this out to see does what what's really driving Alex Leslie: I I think you're right there. You know, I know I I know a couple flatbed carriers, right? I mean part of it is is you ride the wave that comes and and you know it's I know flatbed carriers who you know they were hauling solar panels and and wind turbines under Biden and now they're hauling, you know, Chris Caplice: Turbine. Alex Leslie: the the political waves change and and part of that is is what that space looks like either you know flatbed or depending on the commodity that you're moving. But Chris Caplice: Yeah, yeah. Alex Leslie: you know it it it is certainly a bubble. And the question is can something else kick in? You know, does manufacturing pick up more? But of course, you know, not all of right, it's what is getting manufactured, right? The electronics, not every fleet is moving electronics. You know, it's so it it's That is why I really think even in these areas where there is pockets of like, but demand looks okay here, you gotta caveat those. And that is why, again, even even when there are those good demand signs, it's I I would not say that demand is playing a role overall in in how we're seeing rates recover. Chris Caplice: Yeah, I think I think the layer cake of different things that made driver's restriction, whether it's IC, whether it's the the C DL mills are being shut down, so which and some of these things were a long time coming but it it's having an effect and I don't think any of the large carriers are that upset that prices are going up. You know, so it's a restriction of of drivers, you know, it's supply and demand. And so that yeah. Alex Leslie: It is. And you know, I I would say this is a question that I get asked a lot. How much has the enforcement impacted the change in rates? Chris Caplice: What do you think? Alex Leslie: And honestly, I I don't think a lot. If you if you take out if you take out fleets reducing their capacity, if you take out all the other factors, and if you just had, you know, English language proficiency and and a couple of these other, I don't think that moves the needle by itself. Y because again the the trucking industry is just it's so large. There are so Chris Caplice: That that's a really good point. So I think on the national average, I think you're right. But I think they're pockets. Agriculture coming out of the southwest or from Southern Alex Leslie: Yes. Chris Caplice: California got really hit because they Alex Leslie: Yes. Chris Caplice: had a very high proportion that were were ri at risk for that. Alex Leslie: Yeah. And there are certainly large fleets that I've spoken to who, you know, are some of them, you know, obviously they don't mind capacity leaving, but some of them are not happy about the fact that, hey, this driver was actually really good for us and he might not have passed whatever spur of the minute language test was administered. But he or she's been driving for eight years with no incidents. So it it cuts both ways too. But I again, when you think about just how large the industry is. And again, we so in our data, this year we had over 180,000 truck tractors were represented in this year's data. That's something like seven percent of what's on the road. and we saw the truck count go down by 2.4%. So 2.4% of 180 something thousand trucks. That number alone is is you know pretty large compared to the number of drivers taken off for you know, proficient English language proficiency or or these other reasons. When you multiply that across the whole industry capacity leaving organically, you know, that that really is the bigger drop. And I say that as well with owner operators too. When we track the registrations and revocations, that's mostly very small fleets. And that that makes a difference. But one owner operator coming and going is not as big of an impact as, you know, a fleet of a thousand trucks. you know, taking twenty four off the road. Chris Caplice: Yeah. I mean the the big statistic we have is what i what is it ninety percent of the the carriers have less than twenty trucks, but the whole idea is that only like six percent of the carriers have like sixty percent of the capacity. So it's very much two markets really here. And and then that chasm in the middle that's still that that's a hard place to operate. so those two big takeaways. Do you have a third or did we hit them all? Alex Leslie: Well, if I have a third, it is a sort of the smaller one, which is in a way the thing that maybe surprised me the most this year, which was margins actually improved slightly. I don't want to oversell this because d when I say slightly, it's very slightly. Because margins are very narrow. in the you know, in the truckload sector though, we went from being in the red last year to now the average profit margin was point four percent. Point four is not good. Nobody's throwing parties about this, but last year it was down by more than two it was in the red by more than two percent in twenty twenty four, I should say, to be to be clear. Chris Caplice: Yeah, yeah, yeah. Alex Leslie: So going from, you know, a loss of over two percent to being at least in the black by point four, that that is something. Chris Caplice: And is that is that truckload LTL or both? Alex Leslie: That is truckload dry van. Yeah. Refrigerated Chris Caplice: Okay. Yeah, yeah. Alex Leslie: went from I wanna say in twenty four they were at like point one percent profit Chris Caplice: Mm-hmm. Alex Leslie: and now they're at point six percent profit. So, you know, again Chris Caplice: So what was surprising, did you think it would go higher, the margins would go further? Alex Leslie: No, I thought they were gonna be worse. which gives me no pleasure to say, but again, it it 'cause again it costs went up in twenty twenty five. We knew they would. And in fact they accelerated, like we already talked about. But rates weren't in twenty twenty five, it's it's not like rates were getting better. So my worry Chris Caplice: Fair. Fair. No, you're right. You're right. I keep I keep forgetting that your report is through the end of twenty twenty five. because what's funny is at the the January or December twenty twenty four and December twenty twenty five looked identical. But then Alex Leslie: Yeah. Chris Caplice: in January twenty five, the tariffs hit and it just cratered. And so twenty five Alex Leslie: Yep. Yep. Chris Caplice: was not a recovery year. I thought it was gonna be. I cried Wolf. I thought we'd see it in Q two rates would go up, but the tariffs were Just messed with everything. This year we w the the two December looked identical, but it's stuck through January. And that's why it's all in twenty six we've seen that that increase. You're you're right. And Alex Leslie: That's right. Chris Caplice: so the question do you think now, what do you think the twenty six report's gonna look like? the end of the year twenty six for that you'll publish next summer. Alex Leslie: It it looks like costs are gonna be going up at probably similar paces for a lot of these line items, insurance, driver benefits. you know, we are still very much seeing the impact of tariffs, so that impact on trucks and repair and maintenance is big. You know, a a big question is gonna be how much do fleets bet on this market term? If they bet on this inflection, we're gonna see a lot of those truck orders become truck purchases. And then that cost center is gonna spike way up. And that by itself could be enough to swing the cost increase much higher than what it was in twenty twenty five. Now, no. Chris Caplice: Yeah, but at the same time I I agree we're gonna see some costs go up, but rates have gone up. I was just looking the numbers year over year, spot drive in in our in our data in DAT is over thirty-five percent and contracts above about ten, twelve percent year over year annual and and temp control is not quite, like twenty-five percent for spot and about ten percent for contract. So we're seeing Rates going up at a much faster rate than I think costs are. Do you think that gap will increase the margins or do you think costs will catch up? Alex Leslie: I think you're right. I think rates y yes, you are right. That rates are going up at a at a faster rate, Chris Caplice: Master Ring. Alex Leslie: I think, than costs. Now, I have seen some of the data out of DAT showing that, you know, post peak, you know, things have been coming they always do. August Chris Caplice: August. August. Post four things are flattening. You're absolutely right. Yep. Alex Leslie: Dog days, you know, what happens with that as we get closer to the holidays, as you know, Chris Caplice: Exactly. Alex Leslie: people are thinking about inflation and wages. At again, it's been a soft job market for everyone. As we Chris Caplice: Yeah. Alex Leslie: get closer to the holidays, what does that season look like? I think that is gonna be a big factor at the end of the year once we dust has settled and we look at the books for twenty-six overall. But I think the other really big factor though. Also related to how much fleets are going to bet on this is we've made so many cuts. We've cut, I mean, just in twenty twenty five, we cut back office staff by over seven percent. I mean that that is a huge that's a huge number, right? And Chris Caplice: Now did do you track tech spend? I know you I wanted to ask you this 'cause you added tech cab tech s spend in a new question, but do you capture that? 'Cause has some of this back office personnel been replaced by technology? Alex Leslie: what we track is we we added a number for in-cab technology. So not necessarily, you know, right, if you let go five employees and and started a Claude subscription. We don't have that tracked directly. Chris Caplice: Got it. Alex Leslie: so you that is a fair point, but i I think the question is in all of these little areas where we've seen, you know, deadhead percentage go up. Dwell time go up, mileage between breakdowns get get worse, you know, employees let go. All of these areas, the industry has had to make some tough choices over this three-year recession. Do we start, you know, how how much do we need to start recovering that? How much of a pressure is there on, like, okay, now we really do need. To hire back on a couple people to help, you know, really make sure that we're offering competitive service for this market inflection, or you know, make sure we do XYZ to position ourselves. You know, those are the kind of factors that that sneakily increase crop costs across the board. And that factor I think to me is gonna be the biggest one to keep an eye on for once the dust has settled. in twenty twenty six in terms of how much how much of the delta between cost increases and rate increases, how much of that gets covered by some of those other, you know, either overhead costs or or you know, whatever you want to call them. Chris Caplice: Right, right. last last questions. you added some new questions this year. And and I I I we talked a little bit about litigation expense. That was great to see 'cause that's such a huge cost. You had a big section on that, you've done more on it. you also started to ask about hours of service utilization. And for truckload you had it at seven point nine seven hours on average per day for with a typical eleven hour driving time. Did you do you see the hours of service utilization, let's call it that, increasing or decreasing? Alex Leslie: Well, it's our first year asking the question. So I I can't Chris Caplice: So you can't do a trend on a point. Alex Leslie: do a trend, unfortunately. I you know, I will say a little bit more detail behind that number though is that we do see fluctuation. If you look at the report, you might think, well, because truckload is just a hair under eight hours, specialized is just a hair under eight hours for drive time out of the available eleven. LTL is more like six hours. But then all three of them average out at a little over 10 hours, about 10 and a half hours of total on-duty time per day. So you might think, everyone's just running the same, but that that is not the case at all. Even though those averages all line up very neatly, you know, we see swings of an hour and a half in either direction from fleet to fleet. Chris Caplice: Yeah, there we we're doing a study up here and we're finding there's more variability in a driver than there is within a fleet. Because the driver'll have days that'll and it's more like length of haul is a big big indicator. 'Cause if you have these long hauls then you're generally gonna have a higher hour of service utilization versus the short haul multi stops and things. So we'll see more about Alex Leslie: Absolutely. Chris Caplice: that next year then. Alex Leslie: Yes, yes, most certainly. Chris Caplice: But the other one, in cab technology, we talked about this last year. And I Alex Leslie: We did. Chris Caplice: I asked because I asked the question, my opinion is that technology is so advanced to what it was ten years ago that it's changing things. So I know this is the first year. What what kind of what can you tell us about the data that you collected about in-cab technology spend? Alex Leslie: Yeah, it it was really interesting. we we found that it does vary by sector. So if you're looking at the you know, truckload, it averages about like a cent and a half per mile, essentially. Chris Caplice: Hmm. Alex Leslie: is going towards your in-cab tech spend. If you move over to specialized, it's more like two and a half, and then LTL gets up to three cents per mile. Chris Caplice: Really? I would have thought it'd be just the opposite. Alex Leslie: It's partly because it's partly because the the in in LTL you've got a lot of trucks and they're running fewer miles per year. So part of that is an offset. Yeah. So if Chris Caplice: okay. Makes sense. Yeah, yeah, yeah, yeah. Alex Leslie: you look at sort of the raw numbers, they kind of fluctuate between fifteen hundred per truck to twenty five hundred per truck per year. Yep, per year. And so Chris Caplice: Per year. That makes sense. And it's hard because for year to do the activity based pricing that you do, you either have to break it into miles or time. And this is a fixed cost usually, right? Alex Leslie: And we did, and we did actually the way we asked this question was, what do you do per truck? which we then converted back, you know, I just did for miles, just because I think it is an interesting, you know, to be able to compare it to what some of those other costs are, right? Like for a lot of fleets, they're spending as much on their in-cab technology as what they're spending on tolls, for example. Chris Caplice: Do you do you find that that's a really good comparison? That's interesting. Do you find a big differential between size of fleet? Alex Leslie: not as much as between sector, with the exception Chris Caplice: Okay. Alex Leslie: of this was really and I you know, I would like to see another year of data on this. But one of the interesting things we saw was that small truckload fleets spend more on a per mile basis than the others, which makes sense because again, they're the smaller fleet, they're not getting economies of scale. Whereas small in the specialized sectors actually spend less than their larger peers. And I was a little surprised by that. I'm not sure if that it might be just one of those things where we just we need to get another year of data Chris Caplice: Yeah. Alex Leslie: in order to better understand. But Chris Caplice: cost per cab, like for pack cab per year, is that dramatically different for the small and the large? Is it all a function of what their average miles driven is? Alex Leslie: W we saw that the per cab cost for the smaller truckload fleets was higher than the per cab spend. Yeah. Chris Caplice: See that I believe that, because I think the larger ones can push some of that technology centralized. If you're yeah. So what Alex Leslie: Yes, I I think you're absolutely right. They're getting bulk pricing. they're able to make some of that push, but at the same time, you know, to a conversation that we have had, you know, several times, we you know we see more and more tools available for those small fleets to take advantage to better understand the market. Than than ever before. And so if you are a small fleet, if you are an owner operator, you know, yeah, spending, you know, I the number for, you know, large truckload carriers is about 1200 for the very largest. It's about 1500 for kind of everyone in the like 100 to 900 truck range. But for the smallest fleets, it's like about $1,900 per cab. And Chris Caplice: Hm. That's really interesting. Alex Leslie: And again, for them that tech spend might be that competitive advantage to be able to get to the loads. Chris Caplice: You know, it'll interesting to see and I don't know how you would get to this total tech spend, because I guarantee the bigger the carrier, the more they're spending tech internal and at central for dispatching, all that kind of stuff. So that that's a really interesting thing. If you're that small, you need the tech in the truck. Because you don't have a central you don't have a central office. Alex Leslie: Right. Yeah. Chris Caplice: Yeah. No, that's that's I well, I look forward to seeing those numbers next year to see what the trends are. Alex Leslie: You and me both. Chris Caplice: Yeah. And with that, Alex, I'm gonna let you go. Thanks so much. I always learn something new. I appreciate the work that you're doing. I really appreciate that A ATRE makes this available. So if you haven't checked this out, where should people go to download this report? Alex Leslie: Yeah, you can get this and and everything else we do at truckingresearch.org. And I will say as well, if you're listening and you want to get involved in benchmarking, again it's free. so by all means reach out to us. and you know, this data is only available because motor carriers submit it. and you know, in exchange, we provide them all with these customized reports that directly pinpoint. their costs against a pure group of the same sector size, so Chris Caplice: Makes sense. Makes sense. All right. Thanks, Alex. Appreciate it. And we'll see you again next summer. Alex Leslie: Absolutely, Chris. Thanks for having me. Chris Caplice: Yeah, all right, everyone stay tuned for the truckload market update. This is the truckload market update for 3 September 2026. On dry van, we saw the change in active contract rates increase slightly, 0.2%. Spot rates dropped slightly, negative 0.8%. And the current level of replacement rates for dry van is 8.4%, which is identical to what it was in the last period two weeks ago, which means on average, contract rates coming in for dry-van are about 8.4% higher than the rates they're replacing on aggregate. The market gap between spot and contract is 15 cents a mile, where spot is above contract for dry-van. Year-over-year change in spot rates is 37.8% and 12.6% for contract. Again, that's for dry-van. Temp control, we saw contract rates increase slightly 0.3%, spot rates increase slightly 0.1%. Current level of replacement rates is about 8.8%, about the same, a little lower than it was in the last period two weeks ago. The gap is about 5 cents a mile, spot above contract. And the year-over-year change in spot rates is 22% and 11% for contract, about half of what it is for spot. Intermodal, we saw contract rates increase about 3%. change in spot rates increase about 4%. That was a big jump. current level of replacement rates, interestingly, is negative 7%. It's been negative for a while now. Not sure why intermodal contract replacement rates have been negative, but that's what we're seeing in the data. Market gap is still 9 cents a mile higher, or spot above contract. And again, there isn't that much spot in intermodal, to be honest. The year for year change in spot rates for intermodal is twenty-six percent and about ten point three percent for contract. Okay, finally, flatbed. We saw contract rates drop slightly, 0.3%. Spot rates dropped about 2%. kind of surprising. We'll talk more about that in a second. and the replacement rates increased about 9.1%. So it's pretty high there. It's the highest of what we've seen in any of the markets. The gap between spot and contract, interestingly, flipped negative. It was 26 cents a mile positive last period, two weeks ago. It's negative 10 cents a mile. So we'll talk about that. change year over year. For spot rates, 23% up and 15% up in contract rates. That was for flatbed. Okay, so if you look at drive-in, temp control, flatbed, they all had little blips up and down, 0.2%, 0.3%, up or down. Intermodal increased by about 3%. So that's kind of interesting to see how that went out. What's interesting is replacement rates for intermodal is negative. So I don't know how that's playing out. This might be a weird signal that's coming in. Again, replacement rates for all modes except for intermodal. Roughly the same. They increased, you know, the 8% for drive and temp control and 9% for flatbed, about what they were for the previous two-week period, staying at the high single positive digits. Looking year over year, spot rates are about 23 to 30 percent higher for across the modes, and about 10 to 16 percent higher across all the modes. So we're seeing increases as you would expect. contracts about half the growth what inner what spot is, and we expect you know, spot is. Much more volatile, it hit higher magnitudes, it'll come back down eventually. And then finally, the gap between spot and contract is between five and fifteen cents a mile, except for flatbed, which had a 10 cent per mile drop in this time period. So a big drop. I think this is more noise than signal. We'll see what happens. I imagine it'll bop back up. This could be due to the timing. We'll see how that goes. but again, we're seeing not that big of a change. period to period since the last update in middle of August. We'll see how that changes as we enter into Q three or continue through Q three. And that's it for the truckload market update for three September 2026.